Long Island lawyers agree to pay $510K for misusing $1.3M in charitable funds
Attorney General Letitia James announced a settlement on Wednesday with Paul Marchese and Robin Maynard, two Long Island lawyers accused of illegally paying themselves over $1.3 million from a deceased client’s trust and charitable foundation.
Following the death of their client, Helen Gottlieb, Marchese and Maynard controlled funds that Gottlieb had designated for charity.
Marchese unilaterally paid his law firm nearly $600,000 in fees without reporting the financial transactions to the Office of the Attorney General (OAG), as required by law. Additionally, he and Maynard improperly paid themselves salaries from the foundation totaling over $750,000.
As part of the settlement, Marchese and Maynard must pay $510,000 in restitution and may not serve as officers or directors of a not-for-profit corporation or any other charitable organization for three years unless authorized by OAG to do so.
“New Yorkers who generously donate to charity upon their death deserve to have their wishes honored,” said Attorney General James. “Mr. Marchese and Ms. Maynard abused their positions and misused funds entrusted to them, depriving others of significant charitable donations intended to help the most vulnerable. My office will ensure that these funds will be used as intended and continue to enforce the laws that protect charitable organizations.”
Marchese established a charitable foundation and a trust for Gottlieb. The trust held $2 million in assets to fund her foundation upon her death. After Gottlieb passed in 2008, Marchese directed the trust to pay his law firm, Marchese & Maynard LLP, fees totaling $598,931.42. Marchese and Maynard were unable to provide attorney time sheets, invoices, or receipts to prove that they provided legal services worth nearly $600,000 or that Gottlieb knew of or agreed to pay Marchese & Maynard LLP that amount.
Over the next decade, Marchese and Maynard also paid themselves salaries totaling $758,334 as directors of Gottlieb’s charitable foundation, in violation of New York law. These salaries were substantially greater than the amount the foundation disbursed in charitable grants.
In the settlement, Marchese and Maynard admitted to failing to register the trust after Gottlieb’s death, failing to retain timely records of the trust’s expenditures, and operating Gottlieb’s foundation without a legally constituted board of directors. As a result, they set their own compensation without review by non-conflicted directors. They also failed to adopt and adhere to a conflict of interest policy.
As part of the settlement reached with OAG, the foundation will be dissolved and all of its remaining assets, which together with the restitution funds exceed $1 million, will be disbursed to other charitable organizations under the supervision of OAG.
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